HONG KONG, March 29 (Reuters) – Hong Kong private home prices climbed 2.2% in February, the second straight monthly increase, helped by improving sentiment after the border with China was reopened, expectations that interest rates are peaking, and a spate of new project launches.
The rise in home prices in February followed a revised 1% gain in January and was the biggest since May 2020, official data showed on Wednesday.
The financial hub this month was ranked by survey company Demographia as the least affordable city in the world in 2022 based on property prices versus median income, with Sydney and Vancouver trailing behind. This was the thirteenth consecutive year that Hong Kong topped the ranking.
“Hong Kong has been given a clear responsibility by the central government to improve housing affordability, and increase house sizes”, Demographia said in its report last week.
Beijing identified unaffordable housing as a key cause of discontent in the former British colony, especially among the city’s youth, and a driving factor in the sometimes violent anti-government protests of 2019.
Some analysts have raised their 2023 forecasts for housing prices in the city over the past few weeks, expecting a reversal after home prices fell around 15% last year. The fall in 2022 was the first annual drop since 2008, with the property market dragged down by a weak economic outlook, rising mortgage costs and a COVID-19 outbreak at the beginning of the year.
JP Morgan analyst Cusson Leung said he expects a 10%-15% rise this year, driven by a slowing pace in interest rate hikes, a stronger economy and increased purchases by non-locals.
“The significant pick up in high-end residential transactions is a strong vote of buying confidence in the Hong Kong housing market,” Leung said in a report.
Recent primary housing projects also recorded strong purchase rates at their launches, Leung said.
Realtor Cushman & Wakefield (CWK.N) expected home prices to rise 5%-10% for the full year, revising its previous forecast of a flat market to a 5% drop, and said transaction volumes would rebound 25%-35%.
Cushman & Wakefield said the reopening of borders and the government’s recent move to lower stamp duties for first-time home buyers of small- to mid-sized apartments had prompted more purchases in the residential market.
Reporting by Clare Jim; Editing by Tom Hogue
Our Standards: The Thomson Reuters Trust Principles.
SYDNEY, March 28 (Reuters) – Brookfield Asset Management (BAM.TO) will spend about $13.3 billion over the next decade to replace Origin Energy’s (ORG.AX) Australian power generation infrastructure with new-build renewables and storage facilities, a senior executive said on Tuesday.
Origin Energy on Monday agreed to a A$15.35 billion ($10.21 billion) takeover offer from a consortium led by Canada’s Brookfield, nearing the conclusion of one of the country’s biggest private equity-backed buyouts.
Australia’s No. 2 power producer has been looking to speed up its transition to cleaner energy, accelerating the planned shutdown of the country’s biggest coal-fired power plant and selling its gas exploration assets.
“Our plan is to invest a further A$20 billion of capital to fully replace its power generation and its power purchases with green power that meets all of its customers requirements, and we propose to do that over a 10-year period well in advance of the 2050 goal,” Brookfield Asia Pacific CEO Stewart Upson told Reuters in an interview, referring to a target for net-zero direct and indirect emissions by 2050.
The Canadian firm enlisted Singaporean funds GIC and Temasek [RIC:RIC:TEM.UL] as co-investors in its bid, while MidOcean Energy will gain control of Origin’s 27.5% stake in Australia Pacific LNG (APLNG).
Upson said Brookfield currently has about $60 billion invested in Australia, but the Origin deal would represent a “step change”.
Argo Investments (ARG.AX) Senior Investment Officer Andy Forster said his firm, the ninth-biggest investor in Origin, was positive about the deal, even though it might take time to gain regulatory approvals from the Foreign Investment Review Board and the competition regulator.
“Brookfield seems very committed to making the deal happen,” he added.
Shares were trading 1% higher at A$8.255 on Tuesday morning, below the implied cash-and-scrip offer price of A$8.91 a share, as the deal is not expected to be finalised until early 2024.
The Brookfield-led consortium trimmed its offer for Origin by 1% last month after a government move to cap gas prices hit valuations in the sector.
“We had to take our time to assess all the different developments and make sure that we are comfortable it didn’t have an impact,” Upson said.
Banking industry volatility also slowed the deal, but the financing was fully committed and was not affected, he added.
($1 = 1.5031 Australian dollars)
Reporting by Praveen Menon and Scott Murdoch; Editing by Jamie Freed
Our Standards: The Thomson Reuters Trust Principles.
HOUSTON/CARACAS, March 23 (Reuters) – Expanded oil export contract reviews at Venezuela’s state-run PDVSA have nearly halted all commercial crude and fuel releases, as officials seek to match past invoices with payments, according to documents and people familiar with the matter.
An anti-corruption probe has led to the recent arrests of about 20 PDVSA employees, judges and politicians, and prompted the resignation of powerful oil minister Tareck El Aissami. An oil export suspension that first began in January under El Aissami has worsened, internal documents showed.
PDVSA, which accounts for most of the OPEC nation’s export revenue, delivered documents to prosecutors that revealed $21.2 billion in commercial accounts receivable in the last three years, of which $3.6 billion are potentially unrecoverable.
Across Venezuela’s export terminals, only four PDVSA customers were active this week: Iran’s Naftiran Intertrade Company (NICO), U.S.-based Chevron (CVX.N), Cuba’s state-owned Cubametales and Hangzhou Energy, according to PDVSA schedules.
NICO, Chevron and Cubametales are taking cargoes as compensation for pending debt or oil swaps, which reduces PDVSA’s risk of failed payments. Hangzhou Energy’s contract is the only one so far ratified after the audit, according to one of the sources, who spoke on condition of anonymity.
PDVSA, Venezuela’s oil ministry, Cuba’s foreign affairs ministry and a Chevron spokesperson did not immediately reply to requests for comment. Hangzhou Energy could not be reached for comment.
AUDIT EXTENDED
The anti-corruption investigation has focused on determining whether customers with contracts that required prepayments had delivered payments. More recently, officials have expanded the scope of the audit to include price discrepancies, and the performance of PDVSA subsidiaries and joint ventures, company sources said.
A bottleneck of tankers waiting for PDVSA to allocate export cargoes has worsened, according to PDVSA’s schedules and vessel monitoring service TankerTrackers.com.
TankerTrackers.com estimated on Thursday there were 23 supertankers, 16 of them near the Jose Terminal, the country’s main export terminal, waiting to load Venezuelan crude and fuel for export. That was up from 21 at the end of January.
Contributing to the shipping delays: Privately-owned shipping agencies working for PDVSA and its customers were placed on hold to revise their registration documents, the people said. Only two agencies continued to service companies.
The delays are worrying some customers whose cargoes of crude, fuel and byproducts have not been shipped on time, according to other people familiar with the matter.
On Tuesday, PDVSA head Pedro Tellechea, who also was appointed as oil minister after El Aissami’s resignation, named two new top executives at the company: Hector Obregon as executive vice president, and Luis Molina as vice president of exploration and production.
Reporting by Marianna Parraga in Houston, Deisy Buitrago in caracas; Additional reporting by Sudarshan Varadhan in Singapore; Editing by Paul Simao
Our Standards: The Thomson Reuters Trust Principles.
TOKYO, March 22 (Reuters) – Japan’s land prices rose for a second straight year at the fastest pace since 2008, a government survey showed on Wednesday, spurred by signs of economic recovery after the coronavirus crisis.
Average land prices grew 1.6% in 2022, outstripping the previous year’s gain of 0.6%, with the trend spreading to the countryside, the survey by the land ministry showed. It was the fastest pace of increase since a 1.7% in 2008.
Demand for housing in urban areas was solid, partly because of low interest rates, while a shift to working from home helped land prices in the suburbs. Demand for offices and condominium sites boosted a recovery in commercial prices.
“The recovery trend in land prices towards the pre-COVID level has become more remarkable, as prices in urban areas continued to grow and expanded to rural areas as well,” said the ministry, which surveyed about 26,000 locations.
Residential land prices rose 1.4% for the year, the fastest pace since 1991 and overtaking a 2021 rise of 0.5%, helped by low interest rates and a government tax break for housing, according to the survey, whose results will provide a basis for land transactions.
Japan’s commercial land prices gained 1.8%, versus growth of 0.4% the previous year, led by solid demand for shops and offices, the survey showed. The return of domestic travellers to tourist destinations helped the recovery.
Expectations for a return of foreign visitors also supported commercial land prices in some popular tourist spots such as Osaka and the ancient capital of Kyoto, after the easing of COVID-19 border curbs.
Commercial land prices rose for the second successive year in metropolitan areas around the capital, Tokyo, and Nagoya, while those in Osaka grew for the first time in three years.
Average land prices in the four major regional cities of Sapporo, Sendai, Hiroshima and Fukuoka advanced 8.5%, up for the 10th straight year, partly led by redevelopment projects. Residential land prices in other regional areas rose for the first time in 28 years.
Land prices in industrial areas rose 3.1%, up for a seventh straight year and at the fastest pace of rise since 1991, as burgeoning e-commerce drives demand for sites suitable for large logistics facilities with good access, the survey found.
Reporting by Kaori Kaneko; Editing by Clarence Fernandez
Our Standards: The Thomson Reuters Trust Principles.
(HONG KONG) – Hines, the global real estate investment, development, and property manager, announced today the official opening of “Dash Living on Prat,” its premier and innovative tech-driven co-living rental offering for young professionals in the heart of Tsim Sha Tsui (“TST”), Hong Kong.
Formerly “The Butterfly on Prat Hotel,” the 6,500-square-metre 158-key hotel was purchased in 2021 on behalf of Hines’s Pan-Asia fund, Hines Asia Property Partners (“HAPP”), in partnership with MindWorks Properties, a Hong Kong-based real estate and technology firm. The hotel was rebranded and significantly renovated to transform it into a premier co-living complex featuring design, amenities, and community lifestyle targeted at today’s young professionals.
“We are seeing an increase in demand for more co-living options across Greater China,” said Claire Cormier Thielke, senior managing director and country head of Greater China at Hines. “In markets with high prices like Hong Kong, this differentiated accommodation offering aims to allow tenants to share experiences, develop their network, form relationships and build on the Hines promise of providing high quality living.”
The new complex includes ground-floor retail and will serve as the co-living flagship for Dash Living, one of Hong Kong’s largest operators of urban professional housing. It is in a strategic location adjacent to parks and restaurants, is convenient to both Hong Kong metro and the China High-Speed Rail to the Mainland and provides unparalleled access to the Greater Bay Area.
“This is an exciting option for young professionals that provides them with independence, comfort, amenities and community,” commented Chiang Ling Ng, chief investment officer, Asia at Hines. “As we continue to invest across the living space, we continue to seek out similar residential opportunities in the region.”
Marketing Communications
About Hines
Hines is a global real estate investment, development and property manager. The firm was founded by Gerald D. Hines in 1957 and now operates in 30 countries. We manage nearly $96B1 in high-performing assets across residential, logistics, retail, office, and mixed-use strategies. Our local teams serve 480 properties totaling nearly 241 million square feet globally. We are committed to a net zero carbon target by 2040 without buying offsets. To learn more about Hines, visit www.hines.com and follow @Hines on social media.
¹Includes both the global Hines organization and RIA AUM as of December 31, 2022.
About MindWorks Properties
MindWorks Properties is a real estate investment and asset management firm founded in 2018 with a focus on non-traditional real estate sectors such as co-living & hospitality, logistics & storage, and data centers. MindWorks Properties is affiliated with MindWorks Capital, a venture capital firm established in 2013 which utilizes a Pan-Asia strategy to source direct investments in technology companies across both Greater China and Southeast Asia. MindWorks currently manages over US$1 billion in total net asset value across its funds and is a co-investment partner of the Innovation Technology Venture Fund initiated by the Hong Kong government. For further information, please visit www.mindworks.vc
About Dash Living
Dash Living is Asia Pacific’s leading provider of rental housing in Hong Kong, Singapore, Tokyo, and Sydney, backed by MindWorks, Grosvenor, Taronga Ventures, Chinachem and more. With 2,000+ rooms and 3,500+ tenant members currently in our portfolio, Dash creates a global accommodation community through sharing economies, tech, and unique tenant experiences, empowering living in a connected world. In 2022 alone, nearly US$500 Million in Gross Asset Value has been acquired by renown real estate asset managers to be managed by Dash Living.
Last summer I penned a piece for Forbes.com with the provocative title, “BoeingBA Has Bottomed. It Could Recover Quickly.” At the time I was guessing what the future held for America’s most storied aerospace enterprise, but market developments during the intervening months have tended to support my thesis.
On March 15—the Ides of March—Boeing vice president for commercial marketing Darren Hulst briefed me on the company’s latest market update. It was an eye-opening experience. Boeing Commercial Airplanes, the commercial-transport side of the house that has traditionally generated most company revenues, is going gangbusters.
In fact, the biggest challenge Boeing, a contributor to my think tank, faces at present is simply keeping up with demand. The narrative surrounding the global air travel market has shifted from one of pandemic recovery to the return of normal growth, meaning a 5-6% increase in demand each year.
Last year was the turning point. 2022 began with air travel at roughly 50% of pre-pandemic levels, but by year’s end, that number had risen to 80%. As of January, global air travel had risen to 84% of the pre-pandemic rate, with many markets—most notably North America—approaching the pre-pandemic norm.
For instance, North America in January stood at 99% of pre-pandemic; Latin America at 91%; Europe at 89%; and the Middle East at 89%. Asia has been the laggard thanks mainly to China’s COVID lockdown, but that story is now over and Asia is expected to be the biggest driver of new demand in 2023.
Given a reversion to previous norms in the marketplace, Boeing figures that airlines will require 41,170 new commercial transports over the next 20 years, 75% of which will be single-aisle passenger planes like the 737, 18% of which will be widebody passenger planes, 5% regional jets and 2% freighters.
These percentages reflect the number of aircraft delivered in each category, but not the value of sales. Because widebodies cost so much more than narrow-bodies, they will likely represent over 40% of the market by value, an estimate that tends to favor Boeing’s product line (more on that later).
Boeing expects that demand for aircraft will be distributed fairly evenly across its major markets, with North America representing 23% of demand, Europe 21%, Asia Pacific outside China 21%, and China itself 21%. Latin America and the Middle East collectively will generate 12% of demand, and Africa 2%.
China remains a huge source of demand, but Boeing does not expect the country to be a major supplier of aircraft beyond its domestic market. The market will remain essentially an Airbus-Boeing duopoly, with the main locus of competition being between the Airbus family of A320 single-aisle jetliners and the Boeing 737 MAX family.
Although the MAX got off to a rocky start, it is now smoothly integrating into the global air fleet. Roughly 900 of the planes have been delivered in multiple variants to 55 carriers, and the aircraft are exhibiting 99.55% schedule reliability.
Airbus was able to increase its market share in narrow-bodies during the MAX groundings, but those are now in the past and Boeing notes that the 737-7/8/9/10 each outperforms its closest Airbus counterpart in range. For instance, the 737-8, which carries 178 passengers, can fly over 6,000 kilometers, while the rival Airbus A320neo with 165 passengers can only fly about 5,000 kilometers.
Similar range disparities prevail in each category of the single-aisle market, giving Boeing a significant advantage as longer routes catch up with short-haul routes in the return to normalcy.
A similar circumstance prevails in the widebody segment of the market, where Boeing’s 787 Dreamliner has led in the opening up of 357 new routes around the world—11 times the number of new routes opened up by the A330neo and A350.
Airbus appears to be losing ground in the widebody market thanks in part to its ill-fated bet on the A380 jumbojet. The A350 launched to compete with Dreamliner does not offer the 787’s degree of sophistication, and that is reflected in divergent trends for repeat orders. To date, 52 repeat customers for Dreamliner have ordered 780 planes, whereas ten repeat customers for A350 have ordered a total of 184 planes.
The market thus clearly is favoring the Boeing product. A similar pattern prevails at the top of the market, where Boeing’s 777 twinjet is outperforming it Airbus counterparts. As the market gradually retires four-engine widebodies, it is migrating toward Boeing products. In 2019, Boeing claimed 60% of the widebody market; in 2022 it claimed 64%.
Boeing’s dominance in widebodies is particularly pronounced in freighters, where it pretty much owns the market.
So five years after it began encountering the twin traumas of aircraft failures and an a global pandemic, Boeing now finds its fortunes being constrained mainly by limited capacity to keep up with demand.
That is a challenge across the industry, with supply underrunning demand in all areas—number of planes available, number of seats available, number of pilots available, number of ground support personnel available. Boeing is struggling to keep pace with demand, but that problem is far more congenial than facing a lack of demand.
It seems that Boeing really is recovering its former strength rapidly, at least on the commercial side. The company’s defense and space business will remain a work in progress for years to come, but during the critical years when the commercial business was faltering, the defense unit kept the company afloat.
The company’s strategy of sustaining a substantial presence in both commercial and military segments of the market thus appears to be vindicated.
As I walked out the front door of Boeing headquarters after receiving Darren Hulst’s briefing, a brightly painted Southwest AirlinesLUV 737 roared over from nearby Reagan National Airport and rapidly gained altitude into a cloudless blue sky.
It seemed like a harbinger of where Boeing Commercial Airplanes is headed.
As note above, Boeing contributes to my think tank.
Check out my website.
BEIJING, March 15 (Reuters) – China’s embattled property sector made new progress in its climb out of a months-long slump as official data for January-February on Wednesday showed much narrower declines in home sales, developer investment and construction starts.
Home sales by floor area in the first two months of 2023 fell 3.6% from a year earlier, according to data from the National Bureau of Statistics (NBS), compared with a 24% decline for the whole of 2022.
The narrower sales decline followed a rise in new home prices in January, the first uptick in a year, as buyers, while still cautious, found solace in a slew of supportive policies, expectations of more stimulus steps and China’s exit from its crushing zero-COVID regime.
Property investment by developers in January-February was down 5.7% on the same period of 2022, improving on December’s 12% annual slump and a 10% decline for the entire 2022.
Analysts expect property sales to be the first indicator to turn positive soon. They see property investment rebounding in the second half of 2023.
“The figures are a good start to the recovery of the property market for 2023, and will further boost confidence,” said Yan Yuejin, analyst at the E-house China Research and Development Institution in Shanghai.
“Property sales figures are expected to turn from negative to positive in the first quarter of the year, the biggest sign that the property market is recovering.”
An index tracking China’s real estate shares (.CSI931775) rose 1.4% on Wednesday, while Hong Kong-listed mainland property developers (.HSMPI) climbed more than 2.5%.
Sentiment for China’s property sector, for years a pillar of growth in the world’s second-biggest economy, has been crushed by multiple crises since mid-2021, including developers’ debt defaults and stalled construction of pre-sold housing projects.
DEMAND BOOST
The lifting of COVID-19 restrictions late in 2022 and release of funds to developers for ensuring delivery of pre-sold projects would boost demand, said analyst Ma Hong at Zhixin Investment Research Institute.
“Investment by developers, a key indicator of market performance, will likely rise in the second half of the year, meaning not only an overall rebound, but also a substantial improvement in the operating conditions of real estate companies,” Ma said.
New construction starts measured by floor area in January-February fell 9.4% from a year earlier versus a 44% plunge seen in December and a 39% tumble for the whole of 2022.
Developers’ access to funds has also improved. Developers raised 15% less funds in the first two months of 2023 than a year earlier. In all of 2022, their fund raising was down 26% on 2021.
“Real estate companies face a peak period of debt repayment in the first half of the year, and will only have the will and ability to expand their investments once sales and financing have grown,” said Zhixin’s Ma.
The NBS did not release land sales data. In 2022, developers bought 53% less land than in 2021. The bureau did not respond to a Reuters request seeking comment on why the data was not released.
Developers were still under great pressure to reduce their stock of unsold homes, since the quantity had risen, said Liu Lijie, analyst at Beike research institute. But the companies’ confidence in getting financing and in buying land had improved marginally, Liu said.
Around half of the 30-odd Chinese developers listed in Hong Kong have defaulted on or delayed bond payments.
At the beginning of the annual meeting of China’s parliament this month, the government made guarding against risks to top property developers one of its top priorities this year, but added that it would prevent disorderly expansion by developers.
(This story has been corrected to say 26% fall in 2022, not in the same period last year, in paragraph 12)
Reporting by Liangping Gao, Ella Cao and Ryan Woo; Editing by Sonali Paul and Bradley Perrett
Our Standards: The Thomson Reuters Trust Principles.
BEIJING, March 15 (Reuters) – China’s retail sales in the first two months of 2023 swung back to growth, but factory activity expanded slightly slower than expected, suggesting the bruised economy still needed time to fully emerge from pandemic damage.
Property investment in the January-February period fell again as home buyers and developers remained cautious despite a slew of supportive government policies.
Industrial output in the January-February period was 2.4% higher than a year earlier, data by the National Bureau of Statistics (NBS) showed on Wednesday, slightly missing expectations for a 2.6% gain in a Reuters poll. The reading accelerated from a 1.3% annual rise in December.
Retail sales in the first two months jumped 3.5% from a year before, reversing a 1.8% annual fall seen in December. The result was in line with analysts’ expectation and with hopes for an economic revival led by consumption as flagging global demand weakens Chinese exports.
The mixed data portrayed an uneven recovery in economic activity following China’s abrupt abandonment late last year of its three-year-long campaign to control COVID-19.
Latest Updates
View 2 more stories
It pointed to “a steady rather than accelerating momentum”, said Zhou Hao, chief economist at Guotai Junan International. It indicated that strong policy support was needed to unleash the growth potential, he said.
Fixed asset investment in the first two months was 5.5% higher than a year earlier, compared with expectations for a 4.4% rise. Government support appeared to have helped, said Zhou.
For all of 2022, fixed asset investment was up 5.1% on 2021.
Within January-February fixed-asset investment, infrastructure investment surged 9.0% from a year before.
However, property investment in the two months was still down 5.7% on the same period of 2022, after showing an annual fall of 12.2% in December.
LIQUIDITY INJECTIONS
The NBS publishes combined January and February data to smooth out distortions caused by the Lunar New Year holiday, which fell in January this year but was in February in 2022.
The central bank ramped up liquidity injections on Wednesday when rolling over maturing medium-term policy loans for a fourth month in a row. It also kept its policy interest rate unchanged. Both decisions matched market expectations.
China has set a modest annual growth target of around 5% this year after significantly missing its target for 2022 and recording one of its worst showings in nearly half a century.
Achieving the 2023 target would not be an easy task and would require more effort, new Premier Li Qiang said on Monday.
The government prioritised economic growth and employment in a work report delivered to the annual meeting of parliament, which wrapped up on Monday. Authorities set a goal of creating around 12 million urban jobs this year, up from last year’s target of at least 11 million, and warned that risks remained in the real estate sector.
In the first two months, the nationwide survey-based urban jobless rate climbed to 5.6% from 5.5% in December.
Employment was basically stable, and seasonal factors had caused the rise in the jobless rate for February, NBS spokesman Fu Linghui told reporters.
Additional reporting by Qiaoyi Li; Editing by Bradley Perrett
Our Standards: The Thomson Reuters Trust Principles.
SEOUL, March 15 (Reuters) – Samsung Electronics Co Ltd (005930.KS) on Wednesday said it will invest around 300 trillion won ($230 billion) by 2042 to develop what the government called the world’s largest chip-making base, in line with efforts to enhance South Korea’s chip industry.
The amount makes up most of the 550 trillion won in private-sector investment announced by the government on Wednesday, under a strategy that expands tax breaks and infrastructure support to increase the competitiveness of high-tech industries including those involving chips, displays and batteries.
Samsung’s manufacturing additions will include five chip factories and attract up to 150 materials, parts and equipment makers, fabless chipmakers and semiconductor research-and-development organisations, the Ministry of Trade, Industry and Energy said in a statement.
Other countries have announced plans to bolster domestic chip industries, including the United States which last month released details of its CHIPS Act, which offers billions of dollars in subsidies for chipmakers that invest in the country.
Latest Updates
View 2 more stories
South Korea, home to the world’s two biggest memory chip makers, Samsung Electronics and SK Hynix Inc (000660.KS), is seeking to improve supply-chain stability to become a major player in the non-memory chip field, currently dominated by chipmakers such as Taiwan Semiconductor Manufacturing Co Ltd (2330.TW) and Intel Corp (INTC.O).
($1 = 1,305.1200 won)
Reporting by Heekyong Yang and Joyce Lee; Editing by Christopher Cushing
Our Standards: The Thomson Reuters Trust Principles.
SUKARAJA, Indonesia, March 15 (Reuters) – As plans by Indonesia’s president to build a new $32 billion capital city on Borneo island slowly start to take shape, the once sleepy settlement of Sukaraja is being rapidly transformed.
Headman Rizki Maulana Perwira Atmadja, 38, said land prices around his village – 10 km (6 miles) from where a presidential palace is being built – had jumped four-fold. Some farmers had “suddenly bought a new car” after selling part of their palm or rubber plantations, he said.
His own business, a guest house and a cafe in front of palm trees, has also thrived with an influx of workers, Rizki said. He has rented out rooms for constructions workers while nearby, several homes have been turned into shops.
Four years after President Joko Widodo announced plans for a new capital, a site spanning nearly 260,000 hectares (642,474 acres) named Nusantara, construction is picking up pace in its central area. While some may be cashing in, others fear the transformation.
Latest Updates
View 2 more stories
Yati Dahlia, 32, of the area’s indigenous Balik tribe, has been trying to purchase land somewhere nearby, knowing her current home is located where government buildings are due to be built.
But she said prices had soared to 700 million rupiah to 1.2 billion rupiah (around $45,500 to $78,000) for a similar size plot just outside Nusantara’s main area, up 10 times the government compensation for her land and a blue plywood shack where she now sells food.
“We feel like (the government) is killing us slowly,” said Yati.
She and other members of the tribe are appealing for more, but many Balik people do not have proper documents for their land, which reduces leverage during negotiations with the government, Yati said.
Some people have also refused to move because they feel the land is their identity, said Balik tribe leader Sibukdin, 60.
“We only ask the government to give us special attention,” said Sibukdin, who uses one name.
‘FOR SALE SIGNS’
The project, being built in an area largely made up of forest interpersed with logging concessions, plantations, coal mines and villages, is envisioned as a green, smart city, but has been hit by delays due to the pandemic, while Japan’s Softbank Group, which had promised funding, exited last year.
However, Jokowi, as the president is popularly known, has been adamant that his flagship plan to replace congested Jakarta is needed to spur economic growth in less developed parts of Southeast Asia’s largest economy, outside the main island of Java.
This prospect of future growth has driven a land boom, with ‘For Sale’ signs every few kilometres (miles) along a dusty road just outside the designated city centre.
Land prices in places near a water reservoir had risen over 16-fold, said Junaidin, the village chief of Tengin Baru, a settlement of around 4,000 people within Nusantara’s development zone.
In a bid to contain land speculation, Indonesian authorities have frozen administrative approval for land sales, though Junaidin, who goes by one name, said people had been conducting sales under the table.
Bagus Susetyo, head of the East Kalimantan chapter of the Real Estate Indonesia assocation, said transactions without land certificates were weak and could be cancelled if authorities ordered a crackdown.
He said large property companies had not sought to acquire land banks in Nusantara due to the moratorium on permits.
LAND SPECULATION
Numerous large projects in the country have faced delays due to land acquisition issues, including other key Jokowi projects such as a China-funded $7 billion fast-train project in Java and Jakarta’s mass rapid transit railway.
However, the Nusantara authority said land speculation should not affect development plans as compensation for land would be measured fairly by an independent party.
“The government doesn’t decide (prices) on its own, the same way that the residents can’t decide for themselves. If price disputes happen, it will be resolved through the courts,” the authority’s secretary Achmad Jaka Santos Adiwijaya told Reuters.
During a visit in February, President Jokowi said all problems related to land acquisition have been resolved and payments to locals would be made this month, according to a statement from his office.
Jokowi has set an ambitious deadline for construction.
In the first half of 2024, Nusantara will be declared the capital. Key government buildings, including a palace and a presidential office, must be ready by August that year. More than 16,000 civil servants, police and military officers will move in from Jakarta next year.
More than 7,000 workers are currently at the site, with thousands expected to reinforce later in the year.
There has also been an influx of people from other areas seeking work.
Alpian, 55, who quit his job at a coal mine in another part of Borneo to sell clean water from a dispenser in the soon-to-be capital area, said he was earning twice what he used to make.
“More and more water is needed.. the supply from the state firm is not enough,” Alpian said from the back of his silver pick-up truck.
($1 = 15,360.0000 rupiah)
Reporting by Stefanno Sulaiman;
Writing by Gayatri Suroyo;
Editing by Ed Davies and Raju Gopalakrishnan
Our Standards: The Thomson Reuters Trust Principles.